Asset Managers: More SWF Collaboration

Joint Funds

Ashby Monk

We’ve been talking a lot about the idea of ‘joint funds’ and SWFs working in concert over the past few months. In our recent survey of SWFs’ own asset managers, we asked a question about this new trend. According to the respondents, we can indeed expect this type of cooperation among SWFs. I think this a positive development.

I’ve argued before, SWFs can benefit from working together to facilitate local understanding. Academic research by Coval and Moskowitz (2001) has shown that investing locally (within 100 kilometers of the fund’s headquarters) can bump investment returns by over 1% due to information asymmetries. There are thus clear benefits to having local partners. Collaboration or clubbing that brings together two or three funds with diverse backgrounds into cooperation could maximize the effectiveness of the investment function in a specific economic geography.

1 Response to “Asset Managers: More SWF Collaboration”

  1. 1 Korean Collaboration « Oxford SWF Project Trackback on July 15, 2009 at 1:37 pm

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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